WASHINGTON The U.S. regulator charged with overseeing the Federal Home Loan Bank system said in a report on Tuesday the system is overdue for an update in terms of its structure and operation.

The Federal Housing Finance Agency emphasized in the report there needs to be a clearer distinction between the purpose of those banks, which is to aid liquidity needs at banks in a bid to facilitate mortgage lending, with the Federal Reserve, which should serve as a source of emergency liquidity for banks.

(Reporting by Pete Schroeder; Editing by Chris Reese)